Department of Labor Roadshow Webinars Are Coming Your Way

The U.S. Department of Labor will host four webinars in June and July to discuss how the Department is helping workers and employers by reducing regulatory burdens and making it easier to understand and comply with the law. The webinars will also provide an opportunity for workers, employers, and state and local governments to ask questions and discuss how the Department can expand and improve access to its compliance assistance materials.

All events will include U.S. Department of Labor Deputy Assistant Secretary for Policy Jonathan Wolfson.

The webinars will be hosted by the Department’s Office of the Assistant Secretary for Policy and its Office of Compliance Initiatives. Attendance is free, but attendees must pre-register online. If you have questions, please contact Marisela Douglass at douglass.marisela@dol.gov.

The four webinars are:

Agriculture

Guest Speaker: Wage and Hour Division Administrator Cheryl Stanton

Tuesday, June 23, 2020, 1:00 p.m. to 2:15 p.m. EDT

Register at: Compliance Assistance Webinar 1

 

Manufacturing and Construction

Guest Speaker: Occupational Safety and Health Administration Principal Deputy Assistant Secretary Loren Sweatt

Thursday, June 25, 2020, 1:00 p.m. to 2:15 p.m. EDT

Register at: Compliance Assistance Webinar 2

 

Food Service, Hospitality, and Retail

Guest Speaker: Employment and Training Administration Deputy Assistant Secretary Amy Simon

Tuesday, June 30, 2020, 1:00 p.m. to 2:15 p.m. EDT

Register at: Compliance Assistance Webinar 3

 

Health Care and Emergency Responders

Guest Speaker: Employee Benefits Security Administration Acting Assistant Secretary Jeanne Klinefelter Wilson

Wednesday, July 1, 2020, 1:00 p.m. to 2:15 p.m. EDT

Register at: Compliance Assistance Webinar 4

Making Sense of All the Employer Tax Credits for 2020

The IRS is attempting to provide as much information on the various tax credits available to employers during the COVID-19 pandemic.  In its latest bid to streamline the information, the IRS has issued Publication 5419, New Employer Tax Credits.  The flowchart style publication can be found on the IRS website.  The chart breaks the tax credits into two sections.  The first section is on the Employee Retention Credit portion.  It explains the purpose of the credit…to encourage employers to keep employees on their payroll…the amount of the credit…50%…and who is eligible for the credit…all employers regardless of size, but not governments or businesses who received a PPP loan.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Page 2 of the chart outlines the leave credits for paid sick leave and paid family leave.  This applies to employers with 500 or less employees.

For more info or details on these credits see the IRS website.

Opining on Regular Rate of Pay

The U.S. Department of Labor (DOL) has issued three new opinion letters that address compliance issues related to the Fair Labor Standards Act (FLSA).  As a reminder to my readers, an opinion letter is an official, written opinion by the DOL’s Wage and Hour Division (WHD) on how a particular law applies in specific circumstances presented by the employer that requested the letter.  The current group of letters issued include:

 

FLSA2020-3: Addresses excludability of longevity payments from the regular rate of pay. This opinion rules that longevity payments made to employees that clearly “must or shall” be paid cannot be excluded and must be used to calculate the regular rate of pay.  However, if the longevity payment is worded as that it may or may not be awarded, up to the discretion of the employer, then it would not need to be included in the calculation for regular rate of pay.

FLSA2020-4: Addresses excludability of referral bonuses from the regular rate of pay. The employer is offering a referral bonus to employees not involved in recruiting or human resources and would be issued in two parts, one immediately and one if the employee is still employed after a year and so is the employee who was referred.  The opinion states that the first portion of the bonus would not be included in the regular rate of pay calculations as it is not remuneration for employment as it is a voluntary program.  However, the second installment of the bonus would be included as it would be considered the same as a longevity bonus. If the employee received the bonus whether they were still employed or not, it would not be includable.

FLSA2020-5: Addresses excludability of an employer’s contributions to a group-term life insurance policy from the regular rate of pay.  In essence, the opinion states that just because a wage paid is subject to federal taxes under the Internal Revenue Code, does not make the same payment includable in the regular rate of pay.

For more information on opinion letters, see the WHD website.

Last Chance to Register for Form 941:COVID-19 Edition Webinar

Today is the last day to register for our upcoming webinar, Form 941: CCOVID-19 Edition being held tomorrow. The passage of the Families First and Cares Acts have caused massive changes to IRS Form 941 that affect the final three quarters in 2020! 16 new lines now appear on this form along with changes to two others! Are you ready to meet these changes and handle them correctly? Join me tomorrow,  Thurs., May 28th at 10 am Pacific as I examine the Form 941–COVID-19 edition in depth. Use coupon code cjyfrqa6 at checkout for a 10% discount.

The webinar will cover:

  • What’s New for Q2-Q4 2020
  • Families First Act: Credits for Paid Sick Leave and Paid Family Leave
  • CARES Act: including deferring Employer’s Social Security
  • IRS Form 7200: Purpose for the form and how it applies to you
  • Line by line review of the massive changes of the New Revised Form 941

Submitted to the APA for approval for 1.5 RCHs

Child Support Payments & EFT

The Office of Child Support Enforcement published a guide for employers to begin sending child support payments electronically. According to the guide:

All states and territories accept child support payments at their State Disbursement Unit (SDU) by Electronic Funds Transfer (EFT)/Electronic Data Interchange (EDI), the primary method of sending payments electronically. The EDI portion of the transmission includes identifying information so the payment can be properly credited to the payor’s case(s). SDUs centralize the collection and disbursement of all child support payments withheld by employers as well as other types of payments. Using EFT/EDI is well worth the initial effort. Employers that switch from sending paper checks to electronic payments will enjoy lower costs, fewer errors, and faster processing.

Sending child support payments electronically will save an employer time and money

  • Eliminates the cost of printing paper checks and supporting documents
  • Eliminates the cost of postage and delays due to lost or misdirected mail
  • Reduces check handling and processing costs
  • Reduces data entry errors
  • Gets child support payments to custodial parents faster

Getting Started with EFT/EDI

There are several ways to send a child support payment electronically:

  • By using your own payroll software to send Automated Clearing House (ACH) credit payments (similar to direct deposit) through the Federal Reserve’s banking system with EFT/EDI, using the standard child support addendum segment
  • Through a state’s web-based payment service—contact the state child support agency where you send payments for details
  • By using a payroll service provider that is already sending child support payments electronically
  • By using your bank’s online bill-paying serviceThree Steps to Implement

Step 1: Determine whether your payroll/accounting system supports electronic payments for child support.  If it does not, you may want to explore these options:

  • In-house information technology staff may be able to make programming changes so that you can produce electronic payments for child support, including the EDI DED (Deduction) child support addendum record that child support agencies need to identify the payments.
  • Your payroll/accounting software developer may have an enhancement that supports electronic payments for child support. Contact your user’s group or software representative.
  • Your bank may have a software package that will enable you to produce the file formats necessary for electronic payments. Contact your bank and ask for someone in Cash Management, Treasury Management, or Treasury Services.

Step 2: Contact the appropriate child support agency’s SDU.

  • This is not always the child support agency or SDU where you are located. It is the agency or SDU in the state that issued the underlying child support order or where you currently send funds.
  • Find out the EFT/EDI start-up procedures for the child support agency where you send funds. Do not attempt to transmit child support payments electronically without this information.

Step 3: Conduct the EFT/EDI start-up procedures for each of the child support agencies you contacted in Step 2.  These procedures will typically include:

  • An exchange of basic banking information (routing codes, account numbers), Federal Employer Identification Number (FEIN), and locator code information with the child support agency.
  • A reconciliation between child support agency records and employer records of names, Social Security numbers, and case identification numbers so that each employee’s withholdings are properly credited.
  • A transmission of an initial test file, or pre-note, to ensure that the ACH records are formatted and transmitted properly.

Where to go for more information

There are standard record specifications for child support payments.  NACHA (National Automated Clearing House Association) publishes the User Guide for Electronic Child Support Payments (PDF)visit disclaimer page to provide SDUs, employers, and their financial institutions with current formats, definitions, and implementation recommendations to remit child support payments and payment information electronically through the ACH network using current conventions and standards.

 

Avoiding Common Errors When Filing Form 7200

In news for tax professionals and small businesses, the IRS has advised those who are beginning to deal with Form 7200, Advance Payment of Employer Credits Due to COVID-19 to do so carefully to avoid making error when completing the new form.  Mistakes in completing the form can lead to processing delays, which in turn delays the IRS approving the credits.

Background: The Families First Coronavirus Response Act (FFCRA) and the Coronavirus Aid, Relief and Economic Security or CARES Act both provide refundable tax credits for the employer.  FFCRA requires employers (of a certain size) to provide paid sick leave or paid family leave.  To offset the cost of this leave, the employer is permitted to take refundable tax credits against employment taxes.  The CARES Act permits the employer to take a “employee retention credit” equal to 50% of “qualified wages”.  This is also offset against employment taxes. However, it is possible for these credits to exceed the employer’s actual tax deposits.  In this case, the employer is permitted to receive the excess paid leave credits or the employee retention credit in advance by using Form 7200.

 

However, the IRS has noted some common errors or mistakes in filling out the form, slowing the process.  The errors to avoid include:

  • Missing or inaccurate Employer Identification Number (EIN). Each EIN on a tax return should be exact.
  • Checking more than one box for applicable calendar quarter. Only one box should be checked for the correct quarter.
  • Check more than one box for Part 1, Line A. Likewise, only one box should be checked in Part 1, Line A.
  • Skipping Part 1, Line B. Complete Part 1, Line B. In Part 1, Line B check either “Yes” or “No”.
  • Not fully completing Part II. Complete all the lines in Part II. This identifies which credits are being claimed.
  • Not completing Part II, Lines 1-8. Part II should be completed using dollar amounts, not the number of eligible employees. All lines in Part II should be completed with an actual dollar amount.
  • Inputting the number of eligible employees on lines in Part 2, instead of dollar amounts.
  • Not checking the math on lines 4, 7 and 8 (i.e., subtracting instead of adding or vice versa)
  • Not signing the form (automatic rejection)
  • Wrong individual signing the form
    • Sole proprietorship—The individual who owns the business.
    • Corporation (including a limited liability company (LLC) treated as a corporation)—The president, vice president, or other principal officer duly authorized to sign.
    • Partnership (including an LLC treated as a partnership) or unincorporated organization—A responsible and duly authorized partner, member, or officer having knowledge of its affairs.
    • Single-member LLC treated as a disregarded entity for federal income tax purposes—The owner of the LLC or a principal officer duly authorized to sign.
    • Trust or estate—The fiduciary.

Also, Form 7200 may be signed by a duly authorized agent of the Eligible Employer if a valid Form 2848 (Power of Attorney and Declaration of Representative) has been filed.

For more information about Form 7200 and its use can be found on IRS.gov: About Form 7200, Advance Payment of Employer Credits Due to COVID-19.

WHD Issues Final Rule on Bonuses for Fluctuating Workweek Employees

On May 20, 2020, the U.S. Department of Labor Wage Hour Division (WHD) announced a final rule that allows employers to pay bonuses or other incentive-based pay to salaried, nonexempt employees whose hours vary from week to week. The final rule clarifies that payments in addition to the fixed salary are compatible with the use of the fluctuating workweek method under the Fair Labor Standards Act (FLSA).

In the final rule, the Department:

  • Adds language to 29 CFR 778.114(a) to expressly state that employers can pay bonuses, premium payments, or other additional pay, such as commissions and hazard pay, to employees compensated using the fluctuating workweek method of compensation. (The rule also states that such supplemental payments must be included in the calculation of the regular rate unless they are excludable under FLSA sections 7(e)(1)–(8)). The rule grants employers greater flexibility to provide bonuses or other additional compensation to nonexempt employees whose hours vary from week to week, and eliminates any disincentive for employers to pay additional bonus or premium payments to such employees.
  • Addresses the divergent views expressed by the Department and courts―and even among courts―that have created legal uncertainty for employers regarding the compatibility of various types of supplemental pay with the fluctuating workweek method.
  • Adds examples to 29 CFR 778.114(b) to illustrate these principles where an employer pays an employee, in addition to a fixed salary (1) a nightshift differential and (2) a productivity bonus.
  • Revises the rule in a non-substantive way to make it easier to read, so employers will be able to better understand the fluctuating workweek method. Revised 29 CFR 778.114(a) lists each of the requirements for using the fluctuating workweek method, and duplicative text is removed from revised 29 CFR 778.114(c).
  • Changes the title of the regulation from “Fixed salary for fluctuating hours” to “Fluctuating Workweek Method of Computing Overtime.”

Example 1: Suppose an employee were paid $491 in fixed weekly salary plus an $8 per hour nightshift premium. In a week in which the employee works 50 hours, including 4 hours for which the employee receives the nightshift premium, the employee’s straight time pay is $523 ($491 salary plus $32 nightshift premium), and the regular rate is $10.46. The employer need only pay an additional $5.23, half time the regular rate, for each of the 10 overtime hours, for a total of $52.30. The payment of the $8 nightshift premium is reflected in this fluctuating workweek method computation. The fluctuating workweek method therefore correctly computes overtime pay owed under the FLSA when an employee receives a fixed salary and hours based premiums that compensate him or her for all hours worked.

For a complete text of the rule proposal visit the DOL website.

Payroll Lecture 105: Form 941: COVID-19 Edition

If you thought the 2020 Form W-4 was “fun” now we have Form 941-COVID-19 edition coming for the second quarter of 2020. With 16 new lines this edition is going to be “challenging” to say the least. My new webinar covers all the COVID-19 changes to the Form 941. Join me on Thurs., May 28th starting at 10 am Pacific. Use code cjyfrqa6 at checkout for a 10% discount for my blog followers.

Register today! Only $149.00 (use coupon code bbtk7fcj at checkout for 10% discount)

Date: Thursday, May 28, 2020

Time: 10 am to 11:30 am Pacific (90-minutes)

This Presentation will cover:

  • What’s New for Q2-Q4 2020
  • Families First Act: Credits for Paid Sick Leave and Paid Family Leave
  • CARES Act: including deferring Employer’s Social Security
  • IRS Form 7200: Purpose for the form and how it applies to you
  • Line by line review of the massive changes of the New Revised Form 941

FAQs Keeping Pace With COVID-19 Questions

As questions pour into the Department of Labor and the Internal Revenue Service from employers on the Families First Act and the CARES Act, both agencies are updating their respective FAQs.  Here are the latest updates:

 

Department of Labor:

DOL has added four FAQs, #90-#93, concerning paid family leave or paid leave. These are:

  • FAQ #90 explains whether paid leave requirements under FFCRA apply to temporary workers. A temporary service with over 500 employees is not required to provide leave to its employees. However, the business with fewer than 500 employees where the temporary worker is placed may be required to if it is a joint employer.
  • FAQ #91 addresses whether an employee who has been teleworking is entitled to paid sick or family leave for a school closure when schools have been closed for the past four weeks during the teleworking period. The DOL explains the fact the teleworking employee did not request paid leave during the teleworking period does not exclude the employee from taking such leave.
  • FAQ #92 describes what kind of documentation an employer is permitted to require from an employee who is seeking a medical diagnosis related to COVID-19 symptoms. The DOL explains an employer may require the employee to identify their symptoms and provide a date for a test or doctor’s appointment. However, no further documentation or certification is required. FMLA related leave requests are subject to FMLA documentation requirements.
  • FAQ #93 clarifies that workers who have taken paid sick and paid family leave due to a school closure may not continue to take paid family leave when the school year ends for summer vacation. However, the employee can take paid family leave on the basis that the child’s childcare provider or summer camp is closed or unavailable during the summer due to COVID-19.

Internal Revenue Service:

  • The Internal Revenue Service updated FAQs #64 and #65 regarding the COVID-19 Employee Retention Credit for how eligible employers treat health care expenses.
  • Notice 2020-29 provides for increased flexibility with respect to mid-year elections made under a § 125 cafeteria plan during calendar year 2020 related to employer-sponsored health coverage, health Flexible Spending Arrangements (health FSAs), and dependent care assistance programs. The notice also provides increased flexibility with respect to grace periods to apply unused amounts in health FSAs to medical care expenses incurred through December 31, 2020, and unused amounts in dependent care assistance programs to dependent care expenses incurred through December 31, 2020.
  • Notice 2020-33 increases the $500 limit for unused amounts remaining in a health flexible spending arrangement (health FSA) that may be carried over into the following year by making the carryover amount 20 percent of the maximum salary reduction amount under § 125(i), which is indexed for inflation. This calculation had been the basis for the $500 limit under Notice 2013-71, but the $500 limit did not incorporate the indexing. Thus, for 2020, under this new notice the carryover amount will increase to $550.  The notice cross references Notice 2020-29 for guidance on how a § 125 cafeteria plan may be amended to allow prospective health FSA election changes for the 2020 calendar year. Notice 2020-29 provides relief in response to the COVID-19 pandemic that, among other things, permits employers to amend § 125 cafeteria plans to provide participants flexibility to change health FSA contribution elections at such times as the employer permits through the end of 2020, provided that any changes are applied only prospectively.

 

IRS Reminder of COVID-19 Credits

In their latest issue, IR-2020-89, the Internal Revenue Service is reminding businesses of the three new credits that are available to many businesses hit by COVID-19. To recap, these are:

Employee Retention Credit:

The employee retention credit is designed to encourage businesses to keep employees on their payroll. The refundable tax credit is 50% of up to $10,000 in wages paid by an eligible employer whose business has been financially impacted by COVID-19. The credit is available to all employers regardless of size, including tax-exempt organizations. There are only two exceptions: State and local governments and their instrumentalities and small businesses who take small business loans.

Qualifying employers must fall into one of two categories:

  1. The employer’s business is fully or partially suspended by government order due to COVID-19 during the calendar quarter.
  2. The employer’s gross receipts are below 50% of the comparable quarter in 2019. Once the employer’s gross receipts go above 80% of a comparable quarter in 2019, they no longer qualify after the end of that quarter.

Employers will calculate these measures each calendar quarter.

Paid Sick Leave Credit and Family Leave Credit:

The paid sick leave credit is designed to allow business to get a credit for an employee who is unable to work (including telework) because of Coronavirus quarantine or self-quarantine or has Coronavirus symptoms and is seeking a medical diagnosis. Those employees are entitled to paid sick leave for up to 10 days (up to 80 hours) at the employee’s regular rate of pay up to $511 per day and $5,110 in total.

The employer can also receive the credit for employees who are unable to work due to caring for someone with Coronavirus or caring for a child because the child’s school or place of care is closed, or the paid childcare provider is unavailable due to the Coronavirus. Those employees are entitled to paid sick leave for up to two weeks (up to 80 hours) at 2/3 the employee’s regular rate of pay or, up to $200 per day and $2,000 in total.

Employees are also entitled to paid family and medical leave equal to 2/3 of the employee’s regular pay, up to $200 per day and $10,000 in total. Up to 10 weeks of qualifying leave can be counted towards the family leave credit.

Employers can be immediately reimbursed for the credit by reducing their required deposits of payroll taxes that have been withheld from employees’ wages by the amount of the credit.

Eligible employers are entitled to immediately receive a credit in the full amount of the required sick leave and family leave, plus related health plan expenses and the employer’s share of Medicare tax on the leave, for the period of April 1, 2020, through Dec. 31, 2020. The refundable credit is applied against certain employment taxes on wages paid to all employees.

How will employers receive the credit?

Employers can be immediately reimbursed for the credit by reducing their required deposits of payroll taxes that have been withheld from employees’ wages by the amount of the credit.

Eligible employers will report their total qualified wages and the related health insurance costs for each quarter on their quarterly employment tax returns or Form 941 beginning with the second quarter. If the employer’s employment tax deposits are not sufficient to cover the credit, the employer may receive an advance payment from the IRS by submitting Form 7200, Advance Payment of Employer Credits Due to COVID-19.

Eligible employers can also request an advance of the Employee Retention Credit by submitting Form 7200.

The IRS has also posted Employee Retention Credit FAQs and Paid Family Leave and Sick Leave FAQs that will help answer questions.

Updates on the implementation of the Employee Retention Credit and other information can be found on the Coronavirus page of IRS.gov.

Related Items:

FS-2020-05, New Employee Retention Credit helps employers keep employees on payroll